Form 1040 - Schedule K-1 (Form 1120-S) Entity Information

To enter the income items from Schedule K-1 (Form 1120-S) in Tax Processors Plus Online, from the Federal Section of the tax return (Form 1040) select:

• Income
• Other Income
• K-1 Earnings
• Schedule K-1 Form 1120-S - Select Begin to enter the Entity Information menu where you will enter the information about the shareholder and the S corporation.

Part II - Information About the Shareholder

• S-Corporation belongs to - If filing MFJ, select Taxpayer or Spouse as appropriate.

Part I - Information About the S-Corporation

• Enter the S corporation's name, address, and EIN.

Check the box if...

• This K-1 is from passive entity - Check this box if the taxpayer doesn't materially participate in the S corporation, or if the S corporation is involved in rental activity and the shareholder is neither actively nor materially involved.
• There is an amount on line 2 of the K-1 and this is a non-passive entity and you materially participate - Check this box if the S corporation is involved in rental activity and the shareholder meets the tests to be considered materially participating.
• There is an amount on line 2 and you actively participate - Check this box if the taxpayer actively participated in the rental activities of the S corporation. Active participation involves management decisions in a significant and bona fide sense, such as approving new tenants, deciding on rental terms, approving expenditures, etc.
• All Investment is At-Risk - This box is generally checked, but it should be unchecked if the S corporation incurred a loss that was greater than the sum of the taxpayer's stock basis and debt basis in the business. Form 7203 and Form 6198 will both need to be completed also.
• Entire Interest in Investment has been disposed - Check this box if the taxpayer's interest in the investment has been disposed of. Any passive losses will be allowed.
• Basis Computation is Required - This box should be checked if any of the following apply:
  • Schedule K-1 Box 1 or Box 2 is a loss, or there is a loss carryover from last year due to lack of basis.
  • A nondividend distribution is reported in Schedule K-1 Box 16 with code D.
  • The taxpayer disposed of some or all of the stock in the S corporation.
  • The taxpayer received a loan repayment from the S corporation.

Note: This is a brief guide on entering Schedule K-1 (Form 1120-S) into Tax Processors Plus Online. This is not intended as tax advice.

Additional Information:

IRS: Shareholder’s Instructions for Schedule K-1 (Form 1120-S)

Form 1040 - Schedule K-1 (Form 1120-S) Overview

Form 1040 - Schedule K-1 (Form 1120-S) Income

Form 1040 - Schedule K-1 (Form 1120-S) Credit and Other Information

Form 1040 - Schedule K-1 (Form 1120-S) Credit and Other Information